Microsoft (NASDAQ:MSFT) confirmed on Monday that it has bought privately-held enterprise social network Yammer for $1.2 billion in cash.

The business software maker will join Microsoft's Office division, led by president Kurt DelBene. The team will continue to report to current chief executive and PayPal co-founder David Sacks.

The announcement comes about 10 days after the Wall Street Journal reported a potential deal between the two valued at about $1 billion.  

San Francisco-based Yammer was founded in 2008 and is seen as a private Facebook-style social network for businesses to share files and have threaded conversations..

The free service has more than 5 million corporate users and is used by 85% of the Fortune 500 companies, including eBay (NASDAQ:EBAY), which now owns Sacks' PayPal, and Ford (NYSE:F).

"When we started Yammer four years ago, we set out to do something big," Sacks said. "We had a vision for how social networking could change the way we work."